Are you one of the people out there that is constantly worrying about money and their finances to a point where you can’t sleep at night? Do you sometimes don’t even know where your next meal is coming from?
If you’ve ever worried about money, this post is for you. Personal finance doesn’t have to be the most complicated thing in the world. All you need to do is get a little bit of knowledge and follow these 10 simple rules.
Let’s dig into our 10 personal finance rules that you should live by!
10 Personal Finance Rules You Should Live By
1. Think about your future self
One of the most important things about getting better with money is to realize that you need to switch from a presentmentality to a future mentality.
I totally understand the thought process of you’re only young once or you only live once as a reason to want to spend whatever money you get but it obviously isn’t the most intelligent idea if you want to get your finances together.
You need to realize that your future self is going to need money too, and if you make a couple intelligent decisions now you’ll be in a much better place later.
- Related Post: How to Create a Financial 5 Year Plan
2. Don’t let yourself get into debt
Getting deep into debt is one of the biggest mistakes so many people have because it’s so hard to dig yourself back out.
Only use credit cards if you’re 100% sure you can pay it back within a month. Don’t open new credit accounts that you don’t need because that just opens up the opportunity for you to spend money you don’t have.
If you’re able to pay for school out of pocket, do it. Student loan debt can and will weigh you down for years to come.
3. Track your income & expenses & spending
The only way to truly know how you’re doing financially is to make sure you’re tracking where your money is going. You should always know where your money is coming from, where it’s going, and where you can do better. All you need to make sure you’re doing this is a spreadsheet or some paper and you can find awesome tracking templates online!
4. Create & stick to a budget
It just seems like I’m always recommending people to start a budget, but that’s because it’s honestly the most important factor to good financial health. Having a budget takes all the guess work out of personal finance!
I understand that budgets aren’t the sexiest or most fun things to do, but having a plan for your money is going to eliminate so much of your money stress!
5. live below your means
I know, I know. Everybody tells you to live below your means. It’s such a basic concept, yet so many people are unable to do it! If you don’t already know living below your means just means that you spend way less money than you make and you don’t let lifestyle creep get you!
What is lifestyle creep? Lifestyle creep is when you get an increase in income and you let your lifestyle (the money you spend) increase the same amount. This is a problem because you’re never really able to make big changes in your financial situation because you’re never saving much money. Lifestyle creep is a serious issue for people who get their first job after college, they go from making almost nothing, living in a dorm, to making actual money and they spend every single penny!
Try to not spend as much as you make and you’ll be in a pretty good spot!
6. don’t emotional spend
Everybody has their vices. Some people do drugs, some drink, and some spend money they don’t have when they’re feeling blue. Having an emotional spending habit is going to drag you down for your entire life, so it’s best to try and avoid it from the start.
It’s really important to not develop behaviours that allow you to spend money every time something good OR bad happens in your life because you’ll never be able to keep up with your budget!
- Related Post: How to Break Your Overspending Habit
7. minimize your taxes
Nobody likes paying taxes, but they’re a necessary evil that’s designed to make some parts of our lives better. It’s really easy to forget that there are so many ways you can minimize the amount of money you pay in taxes every year!
Before even thinking about filing your taxes you should check out all the ways you can get tax write offs and tax breaks in your country/state/province/wherever you live. Every place is different, so this information is entirely up to you to discover. You can get tax breaks (in some places) for paying interest on student loans, for having a mortgage, for having children, for having a home office, etc.
8. have an emergency fund
Having emergency money ready to go is one of the greatest feelings. It’s nice knowing that if something horrible happens you have the ability to cover (at least most) of the cost without using credit!
How much should you have in your emergency fund? It’s always good to have at least $1,000 to start because most emergencies aren’t going to cost you more than that. However, in an ideal world you’d have at least 3-6 months of your total expenses ready to go at any time to cover any possible injuries or unemployment!
- Related Post: How to Build a $1000 Emergency Fund
9. buy used or in bulk
Everything you buy doesn’t need to be brand new or brand name. Money does not grow on trees so it’s really smart to pinch pennies in as many ways as you possible can.
Buying used is a great way to save money on those big ticket purchases that you have to make. Where’s a good place to find used stuff for purchase? Facebook marketplaces of course! You can find tons of people selling all sorts of things on Facebook and chances are you can find something that you really need.
10. Pay yourself first
Paying yourself first is a really popular personal finance concept because it works. All it means is that you put money towards your debt, savings, or investments before you spend any money on non-essentials.
For example, when I get paid, I pay all my bills first. Then I’ll put money in my savings account and pay down $500 of my student loans. This is before I eat out, or buy clothes, or go out for a drink with friends!
Paying yourself first will help you make financial progress before you spend all your money and can help you to see real changes a lot more quickly.
11. Always have a meal plan
One of the biggest non-useful expenses that most people incur each month is eating out and impulsive snack purchases! The best way to stop this from happening is to always have a meal plan for your household.
If you suck at meal planning as much as I do, there’s this awesome service called $5 Meal Plan that will send you a weekly meal plan & grocery list for only $5 a month! It’s a really awesome program and it has helped me to organize my meal planning efforts without having to come up with interesting meals. Get Your First Two Weeks Free!
12. set financial goals
You must have financial goals on the go at all times so you can always be making genuine progress with your money. Without goals we can just be reacting to things that happen instead of being proactive and changing the way things go.
You can set goals on a whole bunch of things, including:
- Paying off Student Loans
- Paying off Credit Card Debt
- Growing Your Emergency Fund
- Saving for Retirement
- Saving for a Down Payment
- and more!
13. Don’t keep up with the joneses
Attempting to keep up with the joneses or giving into FOMO is going to be the reason for a lot of financial failures. When you try to have everything other people have and do everything other people do, you’re going to end up spending money that you don’t actually have.
Obviously, this is going to be a problem if you’re working with a limited income and can’t afford all the trips you see people online going on all the time.
Try your absolute best to not try and keep up with the joneses, do your own thing and focus on your financial situation instead of making bad decisions based on the actions of others.
14. have a monthly budget meeting
Budgeting isn’t a one-time deal. It’s a constantly changing, complicated thing that needs to be adjusted all the time. It’s like having a baby! You need to figure out what’s wrong with the baby and react accordingly, works the same with the budget.
Having a monthly budget meeting is essential for your budget’s success. This can be alone (if you’re single) or with your significant other depending on your situation.
You can learn more about how to have a monthly budget meeting here!
15. use the 48-hour rule
If you find yourself wanting to spend money on an impulse purchase that wasn’t on your list, wait. Give yourself 48-hours to think about the purchase and really figure out if you want the item that badly.
Chances are you’ll realize that it was just an impulse and you don’t truly need the product to survive until tomorrow!
Also, bonus tip when shopping online, a lot of websites will send discounts after a few days if you left something in your cart!
16. start investing early
There’s this magical thing called compound interest, I won’t go into details here because it’s a little confusing for beginners. Here’s an Investopedia article you can check out to learn more.
Anyway, compound interest is a great reason why it’s so important to start investing your money early so you give it ample time to grow and earn interest! I’m not saying you have to start as soon as you turn 18, but starting to invest as soon as possible will help you more than it will hurt you!
17. Don’t Pay Full Price
Paying full price is a joke on a stick! Why would you ever want to pay full price for something that you could get a discount or cash back on?
18. Be Kind To Yourself
Personal finance is just that, personal. One of the most important things you can learn when it comes to personal finance is that you can’t be perfect all the time. And when you slip up, it’s really important to be kind to yourself.
Don’t beat yourself up when you buy something you shouldn’t have or go over budget by a few dollars. It’s going to happen.
It’s just like being on a diet, if you beat yourself up every time you sneak in a candy bar, you’re going to go a little crazy and end up making worse decisions.
So, be kind to yourself. Give yourself some love. Love is good.
Personal finance doesn’t have to be complicated, it doesn’t need to be difficult. If you follow these rules you’ll find yourself saving more money, in less debt, and with more money in the bank.
Give it a try! And if you have any thing you think I should add to this list, let me know in the comments.